The Relationship Between Price to Book Value Ratio and Financial Statement Variables - an Empirical Study of Companies Quoted at the Nairobi Stock Exchange
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Date
2003Author
Marangu, Kenneth M
Type
ThesisLanguage
enMetadata
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The study set out to establish the relationship between price to book value ratio
and dividend payout ratio, return on total assets, return on equity, return per
share, dividend per share and growth rate of earnings after tax for companies
quoted at the Nairobi Stock Exchange.
This is because not much is known about the factors that impact on this ratio
since most of the studies on the price to book value ratio were carried out in
developed markets and their applicability in developing markets like the Nairobi
Stock Exchange has not been empirically tested.
The companies that comprise the Nairobi Stock Exchange 20 share index were
used to predict price book value ratio. Information gathered was summarized
and multiple linear regression was used to estimate price book value ratios. Price
book value was the dependent variable and proxies for dividend payout ratio,
return on total assets, return on equity, return per share, dividend per share and
growth rate of earnings after tax earnings formed the independent variables.
This study has established a statistically significant relationship between price
book value ratio and dividend payout ratio, return on total assets, return on
equity, return per share, dividend per share and growth rate of earnings after tax
for the period 1991 to 2003 for companies that constitute the Nairobi Stock
Exchange 20 share index ..
Citation
Master of Business AdministrationPublisher
University of Nairobi School of Business, University of Nairobi